Assess the various methods by which property is transferred
36286Scenario: Your client Mary, a surviving spouse of John, has approached you to provide her with gift and estate
planning services. Respond to the following questions and submit your answers in a Word Document to the
Unit 2: Assignment Dropbox. Remember to review and reference the applicable sections of the Tax Code,
including Publications 706 and 709.
1. Mary is in the process of transferring a residential house worth $700,000 and company stock worth
$10,000,000 to her descendants. What is the rationale behind the generation-skipping transfer tax?
2. Mary’s descendants include her children, grandchildren, and great grandchildren. Mary is in the
process of transferring a residential house worth $700,000 and company stock worth $10,000,000 to
her descendants. Assuming that the generation-skipping transfer tax did not exist, what type of tax
planning would maximize the preservation of the wealth of Mary’s family?
3. Five years before the death of John, Mary’s spouse, John purchased a $6 million whole life insurance
policy on his life and named his daughter, Jane, the sole beneficiary in agreement with Mary. Shortly
after purchase, John transferred the policy to an irrevocable trust, naming Jane as trustee. John
retained no incidents of ownership. a) Has John made a gift? Explain your response. b) Is the $5 million
death benefit included in John’s gross estate?
4. John died leaving Mary a house worth $700,000, company stock worth $10 million, a vehicle worth
$20,000, and other personal items worth $5,000. Determine and explain the value of John’s estate
property and show the alternate valuation date. Remember to discuss when the fair market values and
sale values are used.
5. How do the estate income tax rules encourage a quick distribution of the estate assets of John? In your
analysis, use income tax rate for income earned by assets held within an estate of 39.6% at $12,400 in
2016.
Respond in a Word Document to the Unit 2: Assignment Dropbox. View the rubric below for grading details.
Assignment Submission Requirements: Responses must adhere to the following formatting guidelines:
Microsoft Word document or appropriate reporting application specified in the assignment, double spacing, 12-
point Times New Roman or Arial font, one-inch margins, APA in-text citations and an APA reference list for
qualitative responses. Show work for all questions that require computations.
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